DUBAI // Some landlords are demanding that tenants pay rent increases of up to 50 per cent to renew their leases, defying the Dubai property regulator’s 5 per cent cap.
Many tenants threatened with eviction if they do not pay are unaware that the law is on their side.
Dozens of tenants in apartment blocks in Jumeirah Beach Residence and Dubai Marina, and villa communities in the Springs and the Lakes, have complained to Rera, the Real Estate Regulatory Authority.
“How can landlords demand 40 per cent more rent after a year? It is an unheard of jump in price and unaffordable for me,” said Aisha Jordan, who was asked to pay Dh65,000 by the end of the month end or leave her studio in Jumeirah Lakes Towers.
“Fortunately, when I checked with Rera I learnt that I was within my rights to stay and my landlord couldn’t push me out.”
Hasan Al Tarsha, a Marina resident who tried to renew his year-old lease this month, said, was shocked when his landlord asked for a 30 per cent increase to Dh65,000.
When Mr Al Tarsha checked with Rera and confirmed the rent cap, his landlord told him a lawyer would deal with his case.
“I know 40 people who have the same problem and are being asked to pay more or leave. This uncertainty is not good,” he said.
Mrs P Punjabi, another Marina tenant whose family agreed to a Dh15,000 increase this year, said they had done so for convenience.
“We were given an eviction notice unless we paid Dh80,000,” she said. “Our son’s school is close by and we would have paid a lot in agency fees and moving charges. But if this continues, we will have to move to a one-bedroom apartment next year.”
Mahesh Kumar has bought his own villa in the Lakes but is renting while builders carry out renovations. When a delay in construction meant he had to ask for two more months on his lease, his landlord asked for an additional Dh55,000 – a 55 per cent increase. He also caved to the demands.
“Demanding 55 per cent was exploitation,” said Mr Kumar. “But in the end we wanted to settle it and put it behind us. We knew we could have continued at our old rental rate, but we didn’t want to complicate things.”
Legal experts say residents facing increased rent demands should stand their ground, because Dubai’s property law favours the tenant.
“Popular belief is that the landlord has all the rights,” said Ludmila Yamalova, a managing partner at the legal consultancy HPL Yamalova Plewka JLT. “But the law clearly protects tenants.”
Rera prohibits raising the rent by more than 5 per cent if the rent is more than 25 per cent below the market rate. Landlords must also give 90 days’ notice of any proposed rent increase, and the rent may be raised only if both parties agree. If the do not, the landlord must ask Rera for a review.
“The notion that the landlord can kick out the tenant and fix an arbitrary rent at their own discretion as they see fit – that’s incorrect,” Ms Yamalova said.
“Basically, the tenant does not have to do anything. The default rule is that the same terms of the original contract automatically apply on renewal,” she said.
“If the tenant does not agree and the landlord insists on the increase then the landlord must take it to the Rent Committee, and whoever files with the Rent Committee has to pay a 3.5 per cent filing fee.”
The rent cap was imposed in 2010 to stabilise the property market after the 2008 peak, when prices soared in an investment frenzy. Now, with signs of economic revival, many landlords are attempting to increase rents in prime areas.
The property consultancy Asteco reports that rents for apartments have increased by 2 per cent and villas by 3 per cent respectively since June.
Craig Plumb, head of research with the property specialist Jones Lang Lasalle, advises tenants to shop around.
“We will not see a major spike in rents over the year,” he said. “So if a landlord is asking for too much, tenants can find other landlords who are more realistic.”